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Calculating Capital gains on land sale: after buying-out an ex-partner?

Discussion in 'Accounting & Tax' started by Seb C, 27th Mar, 2016.

  1. Seb C

    Seb C Member

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    Hi Guys,
    I bought some land with a de facto girlfriend 10 years ago (2006) and we had it in joint names.
    Then, in 2010 we broke up, had a financial settlement and I "bought out" her part ownership of the land, so the title was only in my name.
    I am now planning to sell the land, and I'm trying to work out the cost base for the original value of the land, to offset against my capital gains.
    Can I use the value of the land in 2010 when I took over sole ownership?
    Or, would I need to also include (somehow) the value of the land when I first bought it jointly?

    According to the NSW Valuer General (not sure if i can use this for the cost base in my tax?) the land was worth:
    2006 - $212,000
    2010 - $229,000
    2015 - $293,000

    Any help appreciated! :)

    Seb.
     
  2. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    Normally you would have 2 interests in the land with different tax calcs. But if this was a family law settlement you would inherit her cost base.

    No you won't be able to use the value in 2010.
     
  3. Simon Moore

    Simon Moore Mortgage Broker - Melbourne Business Member

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    To expand on what Terry said. When you and the ex split up, did she pay CGT on the transaction? I'm going to assume that she did not, and she use CGT rollover (Marriage or relationship breakdown and transferring of assets | Australian Taxation Office). This means when you buy the asset from your ex, it's not a CGT event, but you retain the cost base when it was originally purchased.

    If this is the case, which am willing to say 99% it will be, then unfortunately when you sell the cost base will be on the 2006 - $212,000, plus any expenses.

    Does that make sense?
     
  4. Seb C

    Seb C Member

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    Thanks guys; and you're right @Simon Moore my ex didn't pay CGT, - we didn't even know it existed at the time... I didn't know it can roll over in those circumstances, but it does makes sense. Thanks both of you for your help in explaining it, cheers..
     
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  5. Simon Moore

    Simon Moore Mortgage Broker - Melbourne Business Member

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    No problem, hopefully your lawyer adjusted the price to take the CGT into account :)
     
  6. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    Its not whether you paid CGT or not, but whether you did the transfer under a family law settlement that counts. Seek proper advice.
     
  7. Seb C

    Seb C Member

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    @Terry_w , yes it was a financial settlement signed off my solicitors but there was no mention of CGT at the time. I'll be sure to use a good property accountant when I have to work out the CGT!
     
  8. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    You may have grounds to make a claim against your solicitor I fnthey didnt advise you on this or asvise you to get tax advice.